President Trump said he plans to maintain an implicit guarantee for the GSEs if they’re removed from conservatorship. Prominent agency MBS investors expressed relief about the administration’s stance on GSE reform even though they don’t expect near-term action.
Investors saw the value of their agency MBS holdings drop in early April due to volatility tied to trade policies. Many markets recovered from the volatility by the end of June, but the agency MBS market lagged.
If there’s any good news on the agency MBS front it’s that new issuance volume increased from the first quarter to the second. Then again, it was driven by seasonality.
Two Harbors booked a nearly $200 million contingency liability after a court ruled that the REIT improperly ended a contract with its one-time external manager.
Participants in the agency MBS market said if the Trump administration wants to release the GSEs from conservatorship, it should be done in a way that preserves many of the functions currently provided by Fannie Mae and Freddie Mac.
The Federal Reserve is allowing its MBS holdings to run off in a predictable manner; Ginnie provides more details on change to buydown policy; Cerberus affiliate issues securitization of closed-end second liens.
The Trump administration appears unlikely in the near-term to work on ending the conservatorships of the GSEs. And any potential moves will aim to limit disruptions in the mortgage market, according to officials in the administration.
AGNC watched as volatility rocked the agency MBS market this month. The REIT counted on its cash and liquidity to avoid selling assets at a loss. Other REITs also survived unscathed.